Spreadex Market Update
Eurozone surges on hopes of more ECB QE whilst FTSE held back by commodities
The UK index managed to reduce its 45 point nadir to around zero as the morning continued, though the sustainability of any tentative gains will be almost solely reliant on the performance of the FTSE’s commodity stocks. A slight rebound from copper has mitigated some of the mining losses, with Antofagasta, Vedanta Resources, Anglo American and Glenore all posting (so far) solid growth. An apathetic set of oil stocks and continued losses for Rio Tinto and BHP Billiton, however, is preventing the FTSE from stretching too far into the green, leaving it to significantly underperform its European peers.
Disappointing German retail sales and an unexpected contraction in Italian inflation was all the Eurozone had to offer this morning; however, this hasn’t stopped the DAX jumping over 100 points, with the CAC less exuberant at a 35 point increase. In fact that Italian figure hints at the ostensible main catalyst behind the region’s impressive gains; with reports suggesting the central bank might be prepping a €600 billion burst of extra stimulus in order to try and get the Eurozone’s inflation back on track, the thought of Mario Draghi wielding a big needle full of ECB QE has got investors all hot under the collar, leading to Monday’s seemingly unprompted growth.
Arguably the US is going to dictate the overall direction of trading this week, especially with an incredibly important non-farm Friday on the cards; not that anyone has told the Dow, which is looking at a meagre 30 point jump at the open. That could change this afternoon, however, dependent on the state of the Chicago PMI and the pending home sales figures, expected to decline and improve respectively.
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